Sears sales soften in 2nd quarter

HOFFMAN ESTATES, Ill. (AP) — Sears' sales declined in the second quarter as it shifted away from low-margin goods like electronics and it focused on increasing the number of loyal customers through reward programs.

The retailer did post its first quarterly profit in three years, bolstered by selling and leasing back some of its buildings to a new real estate investment trust.

Chairman and CEO Edward Lampert, a billionaire hedge fund investor, combined Sears and Kmart in 2005, about two years after he helped bring the latter out of bankruptcy. Facing increased pressure from Wal-Mart, Target and others, Sears created the Shop Your Way loyalty program which rewards members for items they purchase.

Shop Your Way members made up 74 percent of second-quarter sales at Sears and Kmart locations, but the retailer's performance is still lagging.

Revenue fell to $6.21 billion from $8.01 billion. That was still better than the $5.88 billion booked in the first quarter. Yet sales at stores open at least a year, a key indicator of a retailer's health, declined 10.8 percent.

For the period ended Aug. 1, Sears Holdings Corp. earned $208 million, or $1.84 per share. That compares with a loss of $573 million, or $5.39 per share, a year ago.

Sears said that it received gross proceeds of $2.7 billion for completing a rights offering and sale-leaseback transaction with recently formed real estate investment trust Seritage Growth Properties. Sears created Seritage to extract more revenue from its properties.

Excluding a gain on that sale and other one-time-items, Sears' adjusted loss for the second quarter was $2.40 per share.

The Hoffman Estates, Illinois-based company said Thursday that it has the financial flexibility to continue its turnaround and to fund operations. The company had $1.8 billion in cash at quarter's end.

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